Correlation Between LANSON-BCC INH and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both LANSON-BCC INH and NMI Holdings at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining LANSON-BCC INH and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LANSON BCC INH EO and NMI Holdings, you can compare the effects of market volatilities on LANSON-BCC INH and NMI Holdings and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in LANSON-BCC INH with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of LANSON-BCC INH and NMI Holdings.
Diversification Opportunities for LANSON-BCC INH and NMI Holdings
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between LANSON-BCC and NMI is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding LANSON BCC INH EO and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and LANSON-BCC INH is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on LANSON BCC INH EO are associated (or correlated) with NMI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMI Holdings has no effect on the direction of LANSON-BCC INH i.e., LANSON-BCC INH and NMI Holdings go up and down completely randomly.
Pair Corralation between LANSON-BCC INH and NMI Holdings
Assuming the 90 days horizon LANSON BCC INH EO is expected to under-perform the NMI Holdings. But the stock apears to be less risky and, when comparing its historical volatility, LANSON BCC INH EO is 2.07 times less risky than NMI Holdings. The stock trades about -0.48 of its potential returns per unit of risk. The NMI Holdings is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 3,660 in NMI Holdings on August 25, 2024 and sell it today you would lose (120.00) from holding NMI Holdings or give up 3.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LANSON BCC INH EO vs. NMI Holdings
Performance |
| Timeline |
| LANSON BCC INH |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| NMI Holdings |
LANSON-BCC INH and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LANSON-BCC INH and NMI Holdings
The main advantage of trading using opposite LANSON-BCC INH and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LANSON-BCC INH position performs unexpectedly, NMI Holdings can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in NMI Holdings will offset losses from the drop in NMI Holdings' long position.| LANSON-BCC INH vs. Perdoceo Education | LANSON-BCC INH vs. Q2M Managementberatung AG | LANSON-BCC INH vs. Tencent Music Entertainment | LANSON-BCC INH vs. Addus HomeCare |
| NMI Holdings vs. USWE SPORTS AB | NMI Holdings vs. GungHo Online Entertainment | NMI Holdings vs. Ming Le Sports | NMI Holdings vs. DICKS Sporting Goods |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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